PC Musthafa's JD Fresh Foods Sells Dosa Batter in India
PC Musthafa, right, with his parents. Source: Musthafa’s Facebook post.
May 17, 2022
Dosa, a crepe made from a rice and lentil batter, is a popular food in South India. It is eaten for breakfast, lunch, snack and dinner: just plain with various chutneys, pickles and curries or filled with potatoes, peas, onions and other vegetables.
But preparing the batter – which is also used to make idlis (a steamed snack) - is labor intensive and time-consuming: the rice and lentils have to be soaked overnight; then they have to be ground into a paste; and the paste has to ferment for several hours.
Two entrepreneurs, from widely different backgrounds in India and the U.S. respectively, have set up successful food businesses by figuring out how to produce a ready-to-cook batter in bulk and sell them to consumers, restaurants and hotels.
The batter sold by iD Fresh Food, based in Bangalore, is made with natural ingredients and purified water and has no preservatives. Since its founding in 2005 by PC Musthafa and his four cousins, the company has expanded into selling coffee, paneer (cheese) and breads, including chapatis and parathas, as well as coconut water and grated coconut in a coconut.
The products are sold via 23,000 retail outlets in India, the United Arab Emirates, the U.S., U.K. and Ireland. In the fiscal year ended March 2021, iD Fresh’s revenues rose roughly 25% to reach $38 million, according to The Hindu Businessline.
“I’m waiting to sell a billion dosas” in the United States, Subramanian Krishnan, founder of Shastha (attractively priced) Foods, told localnewsmatters.org this month. His business operates out of a 33,000 square foot warehouse in San Jose, California, with a 7,000 square foot kitchen where the dosa batter is prepared.
Krishnan, 69-years-old, started Shastha in 2003, after going broke following the collapse of his San Jose, California based business. It exported Intel processors, motherboards and hard disk drives to businesses in India. “I had to rebuild my life from scratch. I was in my 40s by then,” he told The Hindu.
Krishnan began by importing and selling Coffee Day filter coffee from India. In 2003, “We stumbled upon the idea to sell idli batter,” Krishnan told The Hindu. He observed that “there was a steady rise in Indian nuclear families in the US and people had no time to buy the rice, soak it, grind it and allow it to ferment.”
The batter and coffee continue to account for a big part of Shastha’s sales. Today, Krishnan sells more than 600 different food and grocery items to mostly Indian consumers in the U.S., both online and through physical retailers.
Shastha’s online store sells a combination of organic dosa and idli batter, two pounds each, for $14.99; 200 ml of filter coffee for $3.99; 50 grams of pavbhaji masala, a spice mix for a Maharashtrian vegetable and bread dish, for $1.99; and 250 grams of Thirunelveli Halwa, a Tamil sweet, for $7.29.
Krishnan grew up in Thirunelveli, in the state of Tamil Nadu. He earned a Masters in Accounting from the University of Bombay.
Since last month, Musthafa’s iD Fresh has also began selling parathas in the U.S. The company is investing $12 million to set up three new factories in the U.S., Delhi and Hyderabad. Its new $5 million factory, in suburban Bangalore, has the capacity to make batter for 2.4 million dosas and 300,000 parathas per day. Last year, the Malabar paratha was the best-selling item for iD Fresh in India, overtaking sales of the dosa-idli batter.
Musthafa has raised $99 million for iD Fresh from venture capital (VC) funds. Investors include Premji Invest, the VC arm of Azim Premji, the founder of Wipro, a Bangalore based information technology company with a market value of $33 billion. Premji, 76-years-old, has so far donated an estimated $25 billion to various philanthropic causes in India. His current net worth is $9 billion according to Forbes.
Musthafa founded iD Fresh after a cousin overheard a customer complaining to the supplier about the quality of the batter. The cousin called Musthafa saying “Let’s create a quality batter company.” Musthafa, who was working in a well-paying job, invested Rs 50,000 ($600) to set up a tiny store in Bangalore, along with four of his cousins. “We started in a 50 sq ft kitchen with a grinder, mixer and a weighing machine,” Musthafa told The Humans of Bombay. In 2008, Musthafa quit his job to become iD Fresh’s Chief Executive. “I always wanted to run a business…” he says.
He grew up in the state of Kerala. After he failed the sixth-grade exam, he dropped out of school to work with his father as a farm laborer. Together, “we barely earned Rs.10 (15 cents) in daily wages. Eating three meals a day was a distant dream; I’d tell myself, ‘Right now, food is more important than education.’”
But a teacher “convinced me to return to school; he even tutored me for free. Because of him, I topped my class in maths! That pushed me to study harder and I became the school topper–my teachers came together and paid my college fees!”
Upon graduating from college, Musthafa started working and then found a job in the Persian Gulf. “I earned well and began saving every penny. Papa had a debt of Rs 2 lakhs ($2,500) and I paid it off in just 2 months! And two years later, I bought my family a home!.” In 2007, he earned an MBA from the Indian Institute of Management, Bangalore.
For the first eight years, iD Fresh had losses and, at times, had problems paying its 25 employees. Musthafa sought to motivate his employees by saying that one day they would be millionaires. “They laughed it off, but we gave them shares from our company and said, ‘Be patient!’.” Then, following a series of investments by venture capital firms and rising sales, iD Fresh is valued at about $260 million. “Finally, we fulfilled the promise we made to our employees; all of them are now millionaires,” notes Musthafa. Such a sharing of ownership with employees is rare among Indian businesses.
In 2018, at an event held at the Kennedy School at Harvard University, Musthafa spoke about wanting to share his success with “the teacher who didn’t let me give up…but when I returned home, I learnt that he’d passed away. I was heartbroken…If only sir could have seen what a laborer achieved because of him…(he and my father) taught me that where you come from doesn’t matter…even a laborer’s son can create a million-dollar company.”
(Photo of dosa courtesy Wikimedia Commons.)
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